Index ETFs kicked off the week with an orderly session, ended flat on Monday and pausing after hitting record highs last week. The market was once again unfazed by a strengthening U.S. dollar. The Dow Jones Industrial Average fell 27 points (0.2%) to 15,092, the Standard & Poor’s 500 Index was unchanged at 1,634, and the Nasdaq Composite gained 2 points (0.1%) to 3,439.
The U.S. Dollar Index rallied for the third straight session and was trading around 83.24, up 0.1%. Part of the greenback’s recent strength is due to reports that the Fed is mapping out plans to wind down its $85 billion a month in asset purchases.
The strength in healthcare stocks helped to keep declines in check. The S&P 500 healthcare sector climbed 0.7 percent and was the best performer. Biotech names provided support for the health care space, which led throughout the day. Meanwhile, other defensively-oriented groups were mixed. The staples sector registered a slim gain while utilities and telecom ended with modest losses. The utilities sector shed 0.6% to extend its recent weakness. While defensive groups saw mixed results, cyclical sectors ended generally lower with financials being the exception.
Stocks took a breather from last week’s record run amid better-than-expected read on domestic retail sales. Retail sales edged up 0.1% in April, higher than the consensus of -0.4%, as gains occurred in most categories. Vehicle sales, up 1.0%, were among the main drivers of the April gain.
Gas station sales slumped 4.7%, the most since February 2009, reflecting lower gasoline prices. This has been a boon to consumers, as it freed income for other discretionary purchases. Sales rose 1.2% at clothing stores and 0.8% at electronics stores. Consumers also spent more money to eat at restaurants and bars, and spent less money at grocery stores to eat at home. On a y/y trend basis, retail sales have increased 3.7%, the least since February 2010, while measures of discretionary spending show growth between 4.0% and 4.8%.
The market was tempered by some lackluster reports from China. The country’s industrial production, fixed asset investment, and retail sales for April that all came in below expectations. Investors are at the cross-road whether positive economic data can help the market rise further, or whether it will spell the end of the Fed’s monetary stimulus, which could derail the rally.
Trend wise, the changes were minor as the Domestic TTI (Trend Tracking Index) ended the day at +4.49% while the International TTI edged to +9.35%.
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